Iron ore: The impact of the epidemic has increased, and risk aversion has increased.
Opinion and logic: Yesterday, both the open interest and trading volume of the iron ore 2109 contract shrank, and its price closed at 1,062.5 yuan/ton, up 20.5 yuan/ton, or 1.97%. The open interest of the most-active iron ore 2201 contract rose while its trading volume experienced decline, and its price closed at 946 yuan/ton, an increase of 4 yuan/ton, or 0.42%. Qingdao Port PB fines reported 1,265 yuan/ton, an increase of 5 yuan/ton, SSF reported 888 yuan/ton, an increase of 2 yuan/ton, and the spread between high and low-grade products was 377 yuan/ton. Yesterday, the port transactions totaled 1.445 million tons, and the transactions continued to pick up from the previous week.
Mysteel statistics: In August, 14 steel mills reduced production and implemented overhaul on equipment, which affected the output of 622,000 tons in August. Ding Liguo, chairman of Xintian Steel and Delong Group, said a few days ago that it is possible to participate in the development of Simandu iron ore. The "Hebei Province 2021 Air Pollution Comprehensive Treatment Work Plan" shows that in 2021, Handan will need to shut down some steel companies (capacity), of which Wu'an will shut down 17 small blast furnaces.
On the whole, the supply side of the external ore remained stable while the internal ore contracted, the domestic consumption side was significantly weaker, the inventory was at the median level over the years, and there was a certain inventory accumulation of expectations, which led to the reversal of the iron ore supply and demand structure. After the iron ore market was affected by the logic of strict crude steel production restrictions last week, it was also affected by the Politburo meeting last weekend. Starting this week, the market will be dominated by the logic of loosening crude steel production restrictions, and ore prices have stabilized after a sharp drop. According to surveys at this stage, the country-wide crude steel production restriction is still in progress in an orderly manner, and the supervisory authority is firm on the decision to implement the crude steel production restriction. Under strict production restrictions, excessively high ore prices will be difficult to maintain, and there is a high probability of weak operation in the future.
Unilateral: cautiously bearish
Cross-species: initiate a long position of coke and a short position of iron ore (01 contract); initiate a long position of thread and hot-rolled coil (10 contract) and a short position of iron ore (01 contract)
Spot-Futures Arbitrage: None
Concerns and risks:
1. The intensity of production restriction and the policy orientation at the thread and hot-rolled coil end may fall short of expectation;
2. The off-season demand performance of the thread and hot-rolled coil end is not as good as expected;
3. Shipping data may change drastically;
4. The epidemic may aggravate and so on.
Rubber: The recurrence of the epidemic caused worries, and the price of rubber pulled back from high.
On August 3, the most-active RU contract closed at 13,325 (-185) yuan/ton, the price of mixed rubber reported 12,175 (-100) yuan/ton, and the basis of most-active contract stood at -175 yuan/ton (+285); the open interest of top 20 actively traded long positions was 55,674 (-4,990) lots, the short position was 84,013 (-5,185) lots, and the net short position was 28,339 (-195) lots.
On August 3, the most-active NR contract closed at 11,000 (-150) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,715 (-15) US dollars/ton, the SMR stood at 1,705 (-10) US dollars/ton, and the SIR figure was 1,650 (0) US dollars/ton. The basis of most-active contract reported -339 (+142) yuan/ton.
As of Jul 23: the total inventory of domestic exchanges was 196,750 (+2,864) tons, and the amount of warehouse receipts of exchanges was 177,910 (+640) tons.
Raw materials: Sheet rubber 50.05 (-0.5), cup lump 45.8 (-0.2), latex 46 (+0.5), RSS3 52.88 (-0.52).
As of Jul 29, the operating rate of domestic all-steel tire factories was 61.12% (-1.63%), and the operating rate of semi-steel tire factories was 57.33 (-1.32%).
Opinion: Due to concerns about the spread of the domestic epidemic, the ferrous and non-ferrous sectors and crude oil all declined sharply yesterday. At the same time, rubber prices were dragged down by the market sentiment, felling back from high yesterday. Domestic heavy-duty truck sales data in July continued to show weakness, but basically in line with market expectations. At present, due to the seasonal off-season in the market, domestic downstream tire factories maintain a short-term operating rate at a low level. After the off-season in August has passed, the operating rate will usher in a rebound, and there is limited room for continued decline. Therefore, the current focus may be on the supply side. Affected by the epidemic, we have seen fewer domestic arrivals, which is reflected in the continued decline in port inventory. As of last weekend, domestic port inventories continued to decline, and there may be limited room for rubber price correction.
Risks: production may increase substantially, inventory may continue to accumulate, and demand may decrease substantially, etc.
Crude oil: API gasoline inventories fell more than expected.
The oil price fluctuated greatly yesterday. According to OPEC’s July export volume data and Kpler’s statistics, Saudi Arabia’s exports increased by about 800,000 barrels per day from the previous week, while exports from the UAE, Iraq, Angola and other countries increased by 150,000 to 200,000 barrels per day, and OPEC's overall export increase was between 1 million barrels and 1.5 million barrels per day on a week-on-week basis. However, due to the unexpected drop of nearly 500,000 barrels per day in Russian exports last month, the week-on-week increase in exports from the production-restricted alliance is about 600,000 barrels per day. However, this export increase is still relatively controllable. The recent market uncertainty is mainly due to the fact that in theory the rate of inventory destocking in July is higher than that in June, but the actual destocking is obviously not as good as expected from the data point of view. The current market concerns are reflected in two points: The first is that Iran may increase its efforts to smuggle crude oil. The second is that China may have released more crude oil reserves from SPR. However, since both of them are off-balance sheet supplies, it is difficult to monitor from the data level, which has caused major concerns in the market recently.
Strategy: neutrally bullish; go long positions of INE crude oil and short positions of Brent or WTI futures
Risk: The Iranian nuclear agreement may be reached quickly or the epidemic will worsen more than expected..
Copper: Copper prices fell due to the drag of crude oil.
Spot: According to SMM, the spot market yesterday showed a rapid downward trend with the continuous inflow of imported copper. In the morning session, Standard-Grade Copper initially reported a premium of 320 yuan/ton, but it was difficult to see a large amount of buying in the market. Subsequently, some holders quickly adjusted the price to a premium of 300-310 yuan/ton, but there were still very few inquiries. With the increasing eagerness to exchange for spot, the holders eagerly broke the premium of 300 yuan/ton and quickly reduced their quotations to around a premium of 270 yuan/ton. After the second trading session, the price reduction was difficult to stop temporarily, and the supply of goods with a premium of about 240 yuan/ton has flowed out, but the market has always been difficult to see good activity. High-Grade Copper and Hydro-Copper are also due to the influx of some brands such as Peruvian and ESOX into the market, resulting in the overall quotation also continuing to decline with Standard-Grade Copper. The price premium of High-Grade Copper fell from a premium of 330 yuan/ton to 270 yuan/ton, which was difficult to have a spread with Standard-Grade Copper, so there were few large transactions. The quotation of Hydro-Copper decreased from a premium of 200 yuan/ton to 150 yuan/ton, which was mainly due to the price drag caused by the outflow of the MET brand. Downstream buying remained on-demand purchase when market prices had fallen slightly.
Opinion: Yesterday the US dollar index and US bond yields both showed a stable trend, and many companies in the US reported relatively good earnings performance, which boosted market risk sentiment to a certain extent. But on the other hand, due to the weakening of crude oil prices, the price of copper has been dragged down to a certain extent from the perspective of its industrial attributes and inflation expectations. However, since fundamental changes are still relatively limited at present, the current copper market may still be dominated by shocks.
On the macro level, the global central bank will continue to maintain the current ultra-loose monetary and fiscal policies in the short term. After the Fed's meeting on interest rates in July, despite the fall in the U.S. dollar, the Fed still did not start to reduce the size of its current bond purchases. In terms of fundamentals, the current TC price continues to rise, coupled with the domestic implementation of reserve release, so the supply side has a relatively negative impact on copper prices. On the demand side, China’s current control of the epidemic is still very successful, and the new energy and new infrastructure sector will continue to drive copper demand. Therefore, in general, we recommend that investors maintain a relatively neutral attitude.
1. Unilateral: neutral
2. Inter-market: postpone
3. Inter-period: postpone
4. Options: postpone
1. The Fed's monetary policy orientation
2. The trend of the US dollar index
3. Policy risks may increase.
PTA: The energy and chemical sector continued to pull back from high, and the PTA processing fee dropped from a high level.
Balance sheet outlook: Under the background of the full implementation of the maintenance, the PTA August balance sheet has little pressure on inventory accumulation, and the rapid inventory accumulation time node will be postponed to September; the inventory accumulation rate of PX from July to August was limited.
(1) Unilateral: In the context of the intensification of the epidemic, investors should take a wait-and-see attitude and wait for buying opportunities after the price correction.
(2) Intertemporal: For the 9-1 spread, it is recommended to take a wait-and-see attitude for the time being.
Risks: PTA factory's control over the maintenance rhythm, the strength of replenishment of terminal speculation, and the progress of Zhejiang Petrochemical's new PX device into use.
策略：1. 单边：中性 2. 跨市：暂缓 3. 跨期：暂缓；4. 期权：暂缓
关注点：1. 美联储货币政策导向 2.美元指数走势 3.政策风险加剧